Since its inception, the United States has been known around the world for its successful execution and robust defense of free-market capitalism. And for that reason, it seems that no matter how America’s economic system changes over time, it is always referred to as capitalism, thus blurring the lines for the economically-illiterate as to what constitutes capitalism in the formal sense. In much the same way, many libertarians – such as myself – have found other labels for their political philosophies (an-cap, voluntarist, etc.) so they may distinguish themselves from some of the negative traits recently associated with libertarianism and return to a more classical definition. Likewise, capitalism has had a number of traits wrongfully tied to it over the years from being stuck in lockstep with the evolution of American politics. But there are three in particular that, if not disassociated with, will spell the end to it altogether.
1. An exorbitant feeling of nationalism toward the “nation-state.”
If you spend any extended amount of time in the US, you’ll eventually hear the word “patriot” tossed out when discussing our history. We often refer to our “Founding Fathers” as patriots in their fight for independence. Over time, however, that definition has taken on new meaning. The patriots of America’s founding were traitors by today’s standards, and “patriot” and “patriotism” have become synonymous with jingoism and apologists for the state. It’s become painfully obvious that the US’s foreign policy endeavors – and as of recent, their blunders – have moved away from the days of “toppling Nazis” and toward viewing military intervention as a physical aspect of our negotiating tactics. By observing history, it should be apparent just how dangerous of a tactic this is. Most, if not all, of the great empires in human history began their downfall by treating military attacks no longer as last resorts, but as unlosable campaigns, and subsequently began overextending their reach as their arrogance blinded them to reality.
Domestically today, we see the military-industrial complex in full swing. Where any dissent or even hesitation of vocal adoration towards our innumerable entanglements abroad gets you labeled as a “hater of freedom” and, ultimately, the free markets we’re “fighting for.” What was once considered to be “problems of the nobles” amongst the peasants, has now morphed into a perception that any attack on the state is equally an attack on every citizen. If we don’t acknowledge this distinction, we may continue our foreign quagmires until it brings our nation to a painful and abrupt collapse, unless the next item on our list does it first.
2. A centrally-planned currency and central banking.
If our imperialism has become an outward extension of our modern negotiating tactics, our central banking system is surely the inward driving force behind it. One aspect crucial to maintaining an overall free-market economy is a free market in currency. While we weren’t the first nation to create a central bank, the size and scope of the American economy – thanks to capitalism – has certainly become the most influential. Now, I’m not here to go into the intricacies of how central banking, fractional reserve, and the Federal Reserve operate, there are plenty of resources – here, here, here, and here – if you are not already aware. My argument is with capitalism being paired to central banking techniques through popular opinion, and the downfall that will bring if not undone. These banking procedures have been behind the biggest boom-bust cycles in American history, the tremendous growth in governmental spending, and let’s not forget that our military campaigns couldn’t be sustained if not for the central banks money creation “paying” the bills. What central banks have done – in not so subtle ways – is give the state the power and ability to transfer wealth from massive groups of its citizens and ensure it goes to the privileged few it chooses by manipulating the market. Even more imperative than the first point on this list, the notion of a central bank being necessary in a free market must be done away with if we wish to forgo a complete transition to totalitarianism.
3. The cruelty of the market giving incentive to the welfare state.
This one I saved for last, because it’s the only characteristic on this list that actually fits within the formal definition of capitalism. Because, with the freedom to prosper, must also come the freedom to fail. And this has spurred a smear campaign on capitalism from its critics, from politicians outright calling for socialism, to college campuses instilling that capitalism is a cruel ideology. As if the ideology itself were not an abstract construct, but a tangible, living being, picking who remains in poverty and who prospers on a whim. Neither socialism nor capitalism are inherently good or evil, rather it is the individual actors who are. And greed – or a human’s desire to pursue their self-interest – is wired into every one of us. Although, while socialism relies on us forgoing that urge as it gives humans authority over one another, expecting benevolence on the authority’s behalf, capitalism acknowledges this trait’s existence and provides an avenue to use greed as a motivator for positive growth. That also comes with a downside, however. Just as evolutionary traits experience dead ends in the pursuit of adapting to one’s environment, the failed experiments that individuals use their freedom to attempt has been spun to paint capitalism negatively as an economic system overall. Despite the innumerable advancements we enjoy today from the successful attempts that this freedom has allowed. It is this foundational misinterpretation regarding the freedom of capitalism that has ushered in several attempts by mankind to stifle its “cruelty,” such as 18th century mercantilism, 19th century socialism, and the 20th century welfare-state.
Unless these problems are dealt with, there’s a good chance that they will only continue to entrench themselves deeper, leading to the adaptation of more authoritarian policies within the US, as public opinion sways away from capitalism. Like a pendulum, however, I believe that a harder turn towards socialism will only lead to a more radical push back towards the formal definition of capitalism in its inevitable failure. But that still doesn’t account for the destruction it will cause along the way that can be avoided if we confront these problems today.
Thomas J. Eckert
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